SERVING SENIOR COLORADO
My Favorite Purchase Of 2020
“They were cash rich and house poor”
I was introduced to a realtor named Michael* who works with Orchard.com, a company that will give you a guaranteed purchase price on your existing home as you look for a new home. Michael introduced me to “Sam and Sally,” a couple who had about $600,000 in cash and equity but the home they wanted was $845,000. And since they were both retired, they could no longer qualify for a traditional purchase mortgage. Their options for buying their dream home were rather bleak.
Then we started talking about buying their last home with a Reverse Mortgage Purchase Loan. After one conversation, we all agreed to have a go at buying their new home with a HECM for Purchase loan. They put an offer on the house, and it was accepted by the seller. I took their loan application, and they made an appointment for HECM (home equity conversion mortgage) counseling. Let’s look at the numbers, then I’ll fill you in on the details.
-$845,000 The purchase price of their dream home.
-$875,000 The appraised value of the home.
-$455,000 The down payment. (Money they brought to close from their cash-stash of $600,000)
-$410,000 The loan amount. (Reverse Mortgage Purchase Money)
-($20,000) loan costs. (included in the $455,000 down payment)
-$0.00 Origination fee. (I waived that fee)
-$865,000 The total amount of the deal. (After their $455,000 down payment, they had about $145,000 in cash. That money included the equity from the sale of their home)
You might be wondering, how did they manage to income-qualify for a loan? A Reverse Mortgage loan has different income qualification requirements. We look at
“Residual Income” in this case the borrowers had about $2,000 per month income. We also added in the $145,000 in cash they would have after the deal closed in our income calculations.
They couldn’t income-qualify for a forward mortgage, but they easily qualified for a Reverse Mortgage purchase loan. If you’d like to know more about qualifying, you can contact me and we can look at your unique situation.
The Bottom Line:
“Sam and Sally” moved into their dream home. Orchard bought their home for cash so they didn’t need to worry about selling their previous home. They are not required to make monthly Principal or Interest payments on their new home. They are required to pay their property taxes, HOA dues and homeowners insurance.
Their interest rate is comparable to a 30 year forward mortgage. They own their home and they can stay there as long as they want. When we first met they were “cash rich and house poor.” Now they are house rich and they have about $145,000 in cash left over from their original $600,000 home purchase fund.
It takes a bit of time to wrap your mind around the concept of buying a home with a Reverse Mortgage. But once you grasp the possibilities you also could end up in your dream home without breaking your personal bank.
I’d enjoy talking with you about your possibilities, call me: Mark Schmidt 720-206-4539
If you’d like to talk with Michael Nirk about a guaranteed offer on your current home, call him: 303-877-2082 Michael is a licensed real estate agent.
Mark Allen Schmidt 720-206-4539
Owner and Broker Remarkable Reverse Mortgage
NMLS 846014 CO Lic 100037582
This is a recent review from a client and new friend. The text is small so I'll write it out for you.
“Remarkable is right. I had a very good experience and I would recommend Remarkable Mortgage to anyone in need of a Reverse Mortgage. Mark is professional, friendly and the best value I found. Thanks again Mark!!!”
“Hi Barbara. It was a joy working with you. It is also nice that you found me on ‘Google my business‘ site. I wish you all the best. Mark”
Colorado Reverse Mortgage Conversations.
“All The Benefits, and None Of The Risks,” of owning a home. I had a conference call with a lady and her two sons. We talked for more than an hour about a Reverse Mortgage for their mom. When they rang off, I called her back and this is what she asked me…
Colorado Reverse Mortgage Conversations.
A gentleman came to my home to replace a door. We got to talking and before he was finished I asked his this question, “Would you be able to retire if you could retire your current mortgage?”
He said, “Yes I would. And my wife as well.
He’s going to talk with his wife then get back to me.